DOL Scale-Back Could Bring Relief for Stockpickers

Scaling back the Labor Department's fiduciary rule could provide some reprieve for active money managers, says Fitch Ratings, easing the pain for stock and bond pickers that have suffered hundreds of billions of dollars in net redemptions in recent years.

The moves could reduce fee-related pressure and slow outflows from active funds and into passive funds, Fitch says, adding that wealth managers will likely benefit from lower compliance costs too.

But Fitch also "expects it will be difficult for some wealth management businesses to reverse course on publicly-articulated fiduciary rule plans already under way."

Merrill Lynch, for example, has said it will no longer let retirement savers pay a commission for trades, and will charge them a fee based on a percentage of assets.

S&P 500's Next Technical Level to Watch: 2300

The S&P 500 is looking for its first-thee day gain of 2017, recently up 0.7% to 2296.

Friday’s advance right now is good enough to swing the benchmark up 0.1% for the week.

Some technical analysts point to last week’s intraday high of 2300 as the critical threshold to determine whether this market can continue to push higher out of its six-week trading range.

Frank Cappelleri at Instinet has been pounding the table all week about how 2300 is critical and it's easy to see why. Stay tuned next week for whether the index can push above this threshold.

Chris Dieterich

Facebook

Twitter

Energy Stocks Rally After GOP Moves to Kill Disclosure Rule

Shares of energy and mining companies jump after the Senate votes to rescind a rule that would have required energy companies to report payments to foreign governments for the right to develop oil, gas and mineral assets.

Supporters of the SEC regulation had argued the rule would promote transparency and curb corruption. But the American Petroleum Institute, which counts Exxon Mobil and Chevron as members, sued to block the rule, arguing it would hurt companies' competitiveness.

White House Spokesman Calls CFPB 'Unconstitutional'

White House spokesman Sean Spicer says the Consumer Financial Protection Bureau is "unconstitutional," which suggests the Trump administration could implement a significant overhaul of the bureau, including firing of its director, Richard Cordray.

The Dodd-Frank law "established an unaccountable and unconstitutional agency that doesn't adequately protect consumers," Mr. Spicer said at a press conference shortly before President Trump signed an executive order to scale back Dodd-Frank.

By declaring the CFPB unconstitutional, Mr. Spcier is running ahead of federal judges who are currently questioning the bureau's status as an independent agency. In a high-profile lawsuit filed by mortgage lender PHH, a federal appeals court ruled that the bureau's single-director structure was unconstitutional and gave the president power to fire the CFPB director at will. The CFPB has appealed the case.

Geopolitical Concerns Outweigh Falling Oil Supply

Geopolitical risks may carry more weight in the oil market now that the global supply glut is easing, writes Michael Loewen of Scotiabank.

For the past few years, an oversupplied market meant that concerns about geopolitical supply disruptions did little to drive up the price of oil. However, as the oil market has started to rebalance, the recent news of Iran sanctions and tension between the U.S. and major oil producing nations could soon be reflected in oil prices.

"As the market continues to tighten...geopolitical supply-risk premiums should return to the market," Mr. Loewen said.

U.S. oil futures rose as high as $54.22 a barrel following news of sanctions against Iran, but pared gains and were recently trading up 0.4% at $53.74 a barrel.

Financial Stocks Pace for Biggest Rally in 2 1/2 Months

Financial stocks in the S&P 500 were racing to their biggest one-day gain since the middle of November amid excitement for President Donald Trump's actions to to roll back regulations in the banking and asset management sectors.

Mr. Trump's executive actions that would take steps toward dismantling the 2010 Dodd-Frank financial-overhaul law and scaling back the Labor Department's so-called fiduciary rule, that would require retirement advisers to act in the best interest of their clients.

The options market was busy with bullish trading targeting the financial sector. One investor purchased about 40,000 call options to buy the Financial Select Sector SPDR ETF at $24 a share by the middle of next month, according to the options desk at Susquehanna Financial Group. The stock traded at 23.69 recently and the trades suggest confidence that the ETF can push more than 1% higher in the weeks ahead.

Chris Dieterich

Facebook

Twitter

Recent Data Has Been 'Awful Good'

Until today, stocks had been wobbling in recent sessions as investors digested policy comments from the new administration, including pronouncements on trade and immigration. But many expect shares to perform well if the economy can maintain its upward momentum.

“The economic and earnings data for the most part has been awful good, not only in the United States but around the globe,” said Jim Paulsen, chief investment strategist at Wells Capital Management.

Coal's Rush from Bankruptcy to Stock Exchange

The coal they produce for steelmaking, metallurgical coal, was the hottest commodity of 2016, tripling from a decade-low. Many miners filed bankruptcy or faced a financial brink from historically low prices the past two years.

Now Warrior Met Coal, Blackhawk Mining, Contura Energy Inc. and Coronado Coal LLC are among the companies that may follow this week's IPO of Ramaco, say people familiar with the matter. No year has ever had more than four coal company IPOs, according to records from data provider Dealogic that go back to 1995.

Stocks Plateau After Morning Rally

U.S. stocks have plateaued after a morning rally, and the major indexes are all within shouting distance of record highs, as a parade of business executives stream in and out of the White House Friday. They're largely praising President Donald Trump's plans to scale back some key financial regulations adopted after the financial crisis.

The Dow Jones Industrial Average is up 172 to 20057, with the financial firms leading the charge. Goldman Sachs, one of the biggest drivers of the Dow since the presidential election in November, is singlehandedly adding about 65 points to the blue-chip index. Visa, J.P. Morgan and American Express are together adding about 60 more.

Financials are in the drivers seat on the S&P 500 too. The sector is up 1.9%, more than double the second-best performing sector, consumer staples. But the gains are broad, with 10 of the 11 sectors in the green. The index as a whole is up 0.7% to 2297.

Erik Holm

Stocks

Facebook

Twitter

Asset Managers Boosted by Potential Rule Rollback

Asset-management stocks are gaining ground Friday, boosted in part by comments from the Trump administration about potential rollbacks of rules governing retirement-savings advice.

Shares in publicly traded asset managers focused on traditional actively-managed funds had lost ground since the rule was proposed early last year.

The so-called fiduciary rule from the Labor Department was expected to channel more money into lower-cost funds, particularly index-tracking funds like exchange-traded funds.

Energy Lending Downturn In 'Final Stages'

Raymond James analysts write that banks are now "moving into the final stages of the energy cycle," now that energy prices have remained stable for a significant period of time.

They say the current state of energy lending includes more resolutions for troubled energy loans and relatively low energy-loan balances at banks. While they also note there's better access to capital for energy companies, the question remains whether banks will resume aggressively lending to these companies or remain cautious.

Apollo Exec Downplays Threat Of Interest Tax Changes

Apollo co-founder Josh Harris downplayed the importance of tax write-offs for interest costs to its business model, when asked on the firm's fourth-quarter earnings call.

House Republicans have proposed eliminating the tax deductibility of interest expenses to help pay for broad tax cuts. Because private equity firms fund buyouts by loading their takeover targets with debt, market participants have speculated that would hurt the industry's returns.